The adage 'build it and they will come' seems to be great force in China. Everyone knows how China has built itself into a manufacturing powerhouse producing everything from toys to electronics, furniture and clothes. Carrying much of the booty made in China are air carriers from around the globe.
US airlines, in particular, are hot to grab slots to gain access to the Chinese market. Soon there will be more thanks to the May 2007 agreement between China and the US government that calls for air rights between the two nations to become fully liberalized by 2011.
This agreement effectively removes limits from the air cargo industry that began with the 1999 air services agreement. The agreement essentially doubles the number of daily flights allowed between the United States and China from 10 to 23 over the next five years. The agreement also allows for new cargo flights operating to and from the United States and China.
As a result of the recent agreement, the US Department of Transportation (DOT) has awarded six of the seven airlines that applied for the slots new route authority. Among them, Delta Airlines was awarded a new direct route from Atlanta to Shanghai, making it the first airline to fly that route. It plans to start the service March 30, 2008. (Its application for service between Atlanta and Beijing was denied.)
"Delta's new flights to China will fill a critical void in air travel today by providing the 65 million residents of the Southeast with direct access to the world's fastest-growing economy," reports Richard Anderson, Delta CEO.
Delta's service to Shanghai follows a period of service cuts to East Asia by the airline. Since emerging from bankruptcy on April 30, Delta, like many US airlines, has been seeking new, lucrative international routes.
United Airlines, which already offers the most flights between the United States and China, was awarded a direct route from San Francisco to Guangzhou. In March it began service between Beijing and Washington Dulles. Like Delta, the carrier will begin service in 2008.
'This lane is important for United cargo because it gives us additional capacity in the most robust freight market in the world,' states Neel Shah, United Cargo vice president sales and marketing. 'More importantly, we are adding capacity in a city that currently doesn't suffer from overcapacity like Beijing (PVG) and Beijing Capital International (PEK). We will also be the only US carrier flying nonstop from New Baiyan (CAN) to the United States, which is added plus for the market.'
The other four proposed slots for new daily flights will begin in 2009. They are: American Airlines for Chicago/Beijing service; Continental Airlines for Newark/Shanghai service; Northwest Airlines for Detroit/Shanghai service; and US Airways for Philadelphia/Beijing service. Final decisions of those four awards will be made after further public comment.
Further, China Southern Airlines, China's largest carrier, will begin daily, nonstop flights between Detroit and Beijing. Flights are expected to begin in March 2009. Chinese carriers Hainan Airlines and Shanghai Airlines both plan to begin service to the United States next year. Hainan has applied for service between Beijing and Seattle and Shanghai Airlines has applied to connect Shanghai to both Los Angeles and Seattle. The biggest restriction on Chinese airlines' growth on air service between the US and China is lack of the necessary aircraft.
CARGO EQUATIONS
Airline executives admit the focus for combination carriers is on passenger traffic.
'Delta's new flights to Shanghai will so fill a critical void in air travel today ' the lack of service between the Southeastern United States and China and the lack of US carrier service between the Eastern US and Shanghai ' by providing improved access for customers in more than 130 destinations across the United States,' said Gerald Grinstein prior to stepping down as Delta's former CEO.
It's a natural fit for these carriers
